A "turn" of inventory is the number of times that the average stocked quantity for a particular item is sold completely over a span of time (a year in this case). For example, if a company sells 23 hammers over a 12-month period and maintain average an on-hand of 2 hammers in stock, the number of turns would be 11-1/2.

Turns is calculated using the following calculation:

Turns is commonly used in combination with GMROII which stands for Gross Margin Return on Inventory Investment (the acronym GMROI means essentially the same thing but isn't necessarily related to inventory). The GMROII figure is the number of turns that actually represent profit. If an item has 7 turns and a GMROI of 2.10 it means that 2.1 turns of the item represent profit.

Total usage and average on-hand use the totals for the past 12 months. Both turns and GMROI figures depend upon historical data for accuracy. Neither figure is particularly useful or accurate when less than a year's sales history is present.

Although the turns and GMROI figures are usually shown by month, they are not calculated for a monthly period. Each month's figures represent a full 12-month of activity. Turns and GMROI are reported relevant to that point in time, not just that month's figures. For example, the Turns (and GMROII) for March 2010 are calculated using the total usage and average on-hand over the 12-month period beginning April 2009. Yearly totals are not shown because the last month of the year represents the prior 12-month period.

Turns and GMROI(I) are not recalculated with each sale. These figures are updated on a daily basis between business days (a procedure is run from the application services to update certain totals). For this reason, any usage and on-hand changes from the current day would not be reflected in the figures shown.

Both Turns and GMROII are maintained and calculated from data kept in the Stock Value SQL table.